Liability of LGUs: contracts
respondent is entitled to recover attorney's fees but
GR No. 72841, Jan 29, 1987
PROVINCE OF CEBU v. IAC +
a petition to review : granting respondent Pablo P.
Garcia's claim for compensation for services rendered as
counsel in behalf of the respondent Province of Cebu.
Facts
On February 4, 1964, while then incumbent Gov.
Espina was on official business in Manila, the Vice-
Governor Almendras and three (3) members of the
Provincial Board enacted Resolution No. 188, donating
to the City of Cebu 210 province-owned lots all located
in the City of Cebu, with an aggregate area of over 380
hectares,; authorizing the Vice-Governor to sign the
deed of donation on behalf of the province. The deed
of donation was immediately executed in behalf of the
Province of Cebu by Vice-Governor Almendras and
accepted in behalf of the City of Cebu by Mayor
Sergio Osmena, Jr. The document of donation was
prepared and notarized by a private lawyer. The
donation was later approved by the Office of the
President through Executive Secretary Juan Cancio.
According to the questioned deed of donation the lots
donated were to be sold by the City of Cebu to raise
funds that would be used to finance its public
improvement projects. The City of Cebu was given a
period of one (1) year from August 15, 1964 within
which to dispose of the donated lots.
Upon his return from Manila,Gov Espina denounced as
illegal and immoral the action of his colleagues in
donating practically all the patrimonial property of the
province of Cebu, considering that the latter's income
was less than one-fourth (¼) of that of the City of Cebu.
To prevent the sale or disposition of the lots, the officers
and members of the Cebu Mayor's League (in behalf of
their respective municipalities) along with some
taxpayers, including Atty. Garcia, filed a case seeking to
have the donation declared illegal, null, and void.
On June 25, 1974, a compromise agreement was
reached between the province of Cebu and the city
of Cebu. On July 15, 1974, the court approved the
compromise agreement and a decision was rendered on
its basis.
Ordering the City of Cebu to return and deliver to the
Province of Cebu all the lots; Ordering the Province
of Cebu to pay the amount of One Million Five Hundred
Thousand Pesos (P1,500,000.00) to the City
of Cebu for and in consideration of the return by the
latter to the former of the aforesaid lots; Declaring the
City of Cebu and all its present and past officers
completely free from liabilities to third persons in
connection with the aforementioned lots, which
liabilities if any, shall be assumed by the Province
of Cebu; Ordering the Register of Deeds of the City
of Cebu to cancel the certification of titles in the name
of the City of Cebu covering the lots
On October 18, 1985, the Intermediate Appellate Court
rendered a decision affirming the findings and
conclusions of the trial court that the private
fixing the amount of such fees at 5% of the market value
of the properties involved in the litigation as of the date
of the filing of the claim in 1975.
Both parties went to the Supreme Court with private
respondent questioning the fixing of his attorney's fees
at 5% instead of 30% of the value of the properties in
litigations as prayed for in his claims.
However, the private respondent later withdrew his
petition in G.R. No. 72818 with the following
explanation: "That after a long and serious reflection
and reassessment of his position petitioner has come to
the definite conclusion that prosecuting his appeal
would only result in further delay in the final disposition
of his claim and that it would be more prudent and
practicable to accept in full the decision of the
Intermediate Appellate Court.
Hence, only the petition of the Province of Cebu is
pending before this Court.
The matter of representation of a municipality by a
private attorney has been settled in Ramos v. Court of
Appeals (108 SCRA 728). Collaboration of a private law
firm with the fiscal and the municipal attorney is not
allowed. Section 1683 of the Revised Administrative
Code provides: Duty of fiscal to represent provinces and
provincial subdivisions in litigation. The provincial fiscal
shall represent the province and any municipality, or
municipal district thereof in any court, except in cases
whereof original jurisdiction is vested in the Supreme
Court or in cases where the municipality, or municipal
district in question is a party adverse to the provincial
government or to some other municipality, or municipal
district in the same province.
When the interests of a provincial government and of
any political division thereof are opposed, the provincial
fiscal shall act on behalf of the province.
"When the provincial fiscal is disqualified to serve any
municipality or other political subdivision of a province,
a special attorney may be employed by its council."
The petitioner anchors its opposition to private
respondent's claim for compensation on the grounds
that the employment of claimant as counsel for the
Province of Cebu by then Governor Rene Espina was
unauthorized and violative of Section 1681 to 1683 in
relation to Section 1679 of the Revised Administrative
Code and that the claim for attorney's fees is beyond
the purview of Section 37, Rule 138 of the Rules of
Court.
It is argued that Governor Espina was not authorized by
the Provincial Board, through a board resolution, to
employ Atty. Pablo P. Garcia as counsel of the Province
of Cebu.
In the present case, the controversy involved an
intramural fight between the Provincial Governor on
one hand and the members of the Provincial Board on
the other hand. Obviously it is unthinkable for the
Provincial Board to adopt a resolution authorizing the
Governor to employ Atty. Garcia to act as counsel for
the Province of Cebu for the purpose of filing and
prosecuting a case against the members to the same
Provincial Board. According to the claimant Atty. Garcia,
how can Governor Espina be expected to secure
authority from the Provincial Board to employ claimant
as counsel for the Province of Cebu when the very
officials from whom authority is to be sought are the
same officials to be sued. It is simply impossible that
the Vice-Governor and the members of the Provincial
Board would pass a resolution authorizing
Governor Espina to hire a lawyer to file a suit
against themselves.
"Under Section 2102 of the Revised Administrative Code
it is the Provincial Board upon whom is vested the
authority 'to direct, in its discretion, the bringing or
defense of civil suits on behalf of the Provincial
Governor _____'. Considering that the members of the
Provincial Board are the very ones involved in this case,
they cannot be expected to direct the Provincial Fiscal
the filing of the suit on behalf of the provincial
government against themselves. Moreover, as argued
by the claimant, even if the Provincial Fiscal should side
with the Governor in the bringing of this suit, the
Provincial Board whose members are made defendants
in this case, can simply frustrate his efforts by directing
him to dismiss the case or by refusing to appropriate
funds for the expenses of the litigation.
The general rule that an attorney cannot recover his
fees from one who did not employ him or authorize his
employment, is subject to its own exception.
We apply a rule in the law of municipal corporations,
"that a municipality may become obligated upon an
implied contract to pay the reasonable value of the
benefits accepted or appropriated by it as to which it
has the general power to contract. The doctrine of
implied municipal liability has been said to apply to all
cases where money or other property of a party is
received under such circumstances that the general law,
independent of express contract implies an obligation
upon the municipality to do justice with respect to the
same." (38 Am. Jur. Sec. 515, p. 193):
"The obligation of a municipal corporation upon the
doctrine of an implied contract does not connote an
enforceable obligation. Some specific principle or
situation of which equity takes cognizance must be the
foundation of the claim. The principle of liability rests
upon the theory that the obligation implied by law to
pay does not originate in the unlawful contract, but
arises from considerations outside it. The measure of
recovery is the benefit received by the municipal
corporation. The amount of the loan, the value of the
property or services, or the compensation specified in
the contract, is not the measure. If the price named in
the invalid contract is shown to be entirely fair and
reasonable not only in view of the labor done, but also
in reference to the benefits conferred, it may be taken
as the true measure of recovery."
The petitioner can not set up the plea that the contract
was ultra vires and still retain benefits thereunder.
Having regarded the contract as valid for purposes of
reaping some benefits, the petitioner is estopped to
question its validity for the purposes of denying
answerability.
The trial court discussed the services of respondent
Garcia as follows:
Thus because of his effort in the filing of this case and in
securing the issuance of the injunction preventing the
City of Cebu and Sergio Osmena, Jr., from selling or
disposing the lots to third parties, on the part of the
members of the Provincial Board from extending the
date of the automatic reversion beyond August 15,
1965, on the part of the Register of Deeds from
effecting the transfer of title of any of the donated lots
to any vendee or transferee, the disposition of these
lots by the City of Cebu to third parties was frustrated
and thus: saved these lots for their eventual recovery
by the province of Cebu."
To deny private respondent compensation for his
professional services would amount to a deprivation of
property without due process of law (Cristobal v.
Employees' Compensation Commission, 103 SCRA 329).
We have carefully reviewed the records of this case and
conclude that 30% or even 5% of properties already
worth P120,000,000.00 in 1979 as compensation for the
private respondent's services is simply out of the
question. The case handled by Atty. Garcia was decided
on the basis of a compromise agreement where he no
longer participated. The decision was rendered after
pre-trial and without any hearing on the merits.
The factual findings and applicable law in this petition
are accurately discussed in the exhaustive and well-
written Order of then Trial Judge, now Court of Appeals
Justice Alfredo Marigomen. We agree with his
determination of reasonable fees for the private
lawyer on the basis of quantum meruit. The trial court
fixed the compensation at P30,000.00 and ordered
reimbursement of actual expenses in the amount of
P289.43.
WHEREFORE, the questioned October 18, 1985 decision
of the Intermediate Appellate Court is set aside. The
Order of the Trial Court dated May 30, 1979 is
REINSTATED.